Brisbane, October 1, 2013- Queenslanders continue to show strong spending confidence, with the state leading the nation in retail turnover growth, new research shows.
According to CBRE’s Australia Retail MarketView Q2, 2013 report, Queensland retail turnover lifted 2.6% in the year to June – the majority of which was due to a sharp rise in food spend. During the same period, there was a 14.8% increase in retail turnover in cafes, restaurants and takeaway food services and an 11.1% jump in household goods retailing.
CBRE Director of Queensland Sales and Leasing Peter Rossi said the strength of food retailing is playing out, with strong tenant demand from several high profile food and beverage chains. The pick-up in activity is not restricted to the CBD, with lifestyle precincts such as Gasworks in Newstead emerging as food, beverage and entertainment destinations.
“As a result of the pick-up in food and beverage retail spending, we are seeing many new ready-to-eat food concepts such as Guzman Y Gomez, Pita Pit, Gurts Frozen Yogurt Bar and Sumo Salad looking to secure a presence in the Brisbane CBD as well as other prominent retail markets,” Mr Rossi said.
“In fashion, international retailers such as Zara, Top Shop and Uniqlo are also showing strong interest in the Brisbane CBD – particularly the Queen Street mall, which remains the most successful retailing mall in Australia.”
The Brisbane CBD continues to evolve, with ISPT undertaking the repositioning of Broadway on the Mall, which will include a flagship retail store fronting the Queen Street mall, Mr Rossi said, adding that this follows the re-launch of Broadway, which has seen several new tenants introduced to the Brisbane retail landscape.
The report shows that the overall CBD retail vacancy rate increased slightly by 0.7% to 9.0% in June. This was primarily driven by a rise in secondary vacancy rates to 10.3%, with the vacancy rate for core assets remaining stable.
CBD rentals during Q2 were reflective of the softer market conditions, with rents remaining unchanged, having stabilised after natural disaster induced falls in 2011.
The report shows Brisbane’s CBD retail development pipeline is limited at present to mixed-use opportunities, with just over 500sqm of spaced added to the market following the completion of the Australian Taxation Office tenanted, 55 Elizabeth Street office tower.
Approximately 2,500sqm of additional CBD retail space is anticipated to come online during the next three years.
Outside of the CBD, just over 14,800sqm of suburban retail space in the south-east Queensland market was completed during Q2, with prominent developments including 5000sqm of Woolworths supermarket and specialty stores within Morayfield Super Centre and a further 3,100sqm at Brightwater Market place.
A further 35,000sqm of shopping centre space is forecast to be added to the market during 2013, with neighbourhood centres dominating the supply pipeline.
“Investors are following the retail spending growth, with food and services based centres remaining in high demand. Centres with high levels of fashion and discretionary spending are less appealing to buyers,” Mr Rossi explained.
Regional developments are anticipated to add a further boost to the supply pipeline – namely the Indooroopilly and West Garden at Upper Mount Gravatt projects – bringing the forecast to more than 164,000sqm during 2014 – superseding levels reached in 2006 and 2007.
The bulky goods sector of the market emerged as a strong performer in Q2, with Queensland recording a 5.9% annual rise in household goods retail turnover in May, 2013. This was significantly higher than the 1.0% experienced nationally, underpinning a 1.5% growth in rents during the same period.
New supply lags behind tenant success, with just over 17,000sqm of bulky goods space added to the south-east Queensland market during the quarter, and a further 36,600sqm of space expected to be completed by the end of the year.
As Bunnings and Masters continue their aggressive roll-out of new stores across the state, an additional 137,000sqm of new supply has been identified for possible completion in 2014. Woolworths’ home improvement brand, Masters, is focusing its efforts on developing its metropolitan store pipeline, with a number of country and regional projects deferred.
CBRE Senior Research Manager Tammy Smith said the state’s increasing population would be a key growth factor over the coming years.
“Strong population growth of 2.2% in the year to December 2012 means economic prospects remain largely positive, with recovery from the low growth profile of recent years forecast,” Ms Smith said.
The shift in consumer spending patterns from discretionary to non-discretionary spending would provide a further boost to the Queensland retail market.
“The market is recalibrating after a sustained period of high consumer spending, where, since 2007, household gearing ratios reached almost 155% of the annual household income,” Ms Smith explained.
“The accumulation of debt, which allowed consumer spending growth to exceed income growth for a decade and a half, has come to an end. As the market adjusts to a more sustainable rate of growth and retail spend, there has been a notable shift away from discretionary spending to non-discretionary.”
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website atwww.cbre.com.au.